Think it’s too late to buy Cameco? Here is the biggest reason why there is still time

Uranium supplier and nuclear fuel service company Cameo (CCJ 3.76%) the stock is up more than 22% in the past month, and understandably some investors may be looking to take profit. However, the investment case for the stock is not based on a short-term improvement in sentiment towards the nuclear industry, but rather on its long-term potential as a source of clean energy.

Nuclear power is back in favor

There is little dispute as to why the stock has rallied strongly in recent weeks. Next from understanding Amazon Web services made with Talen Energy in March to buy power from the latter’s Susquehanna nuclear power plant, Microsoft recently signed a 20-year power purchase agreement to buy power from Constellation Energy.

Both deals highlight the attractiveness of nuclear power in powering data centers run by leading cloud service companies. It’s no secret that growing demand from artificial intelligence (AI) applications is creating increasing demand for power in data centers, and nuclear power is a safe and clean energy source that helps companies like Microsoft and Amazon achieve environmental goals. Investors are buying Cameco stock to gain exposure to the theme.

A long-term perspective

That said, there is a bigger picture to consider here. While the transition to clean energy is still taking place, there is a growing recognition that it will take place at a slower pace than originally thought, and a growing recognition that the intermittency of renewable energy means that it must be supported by energy sources more reliable, such as gas and nuclear. power.

Image source: Getty Images.

This outlook speaks to the long-term potential for a sustainable wave of investment in nuclear power, which goes beyond the recent deals signed by Amazon and Microsoft. As a result, Wall Street may need to revise its long-term profit expectations for Cameco.

Given its natural business niche — uranium and nuclear fuel services are not easy businesses to enter — this could lead to increased long-term profitability at Cameco.